Most companies want their employees to sign a confidentiality agreement as a requirement before they get accepted for employment. This is a legally binding document between two parties or more wherein at least party agrees not to share, disclose or spread certain information. This is the reason why the confidentiality contract is also known as a Non-Disclosure Agreement (NDA).
- 1 Confidentiality Agreement Templates
- 2 What is a confidentiality agreement?
- 3 Confidentiality Agreement Forms
- 4 Types of confidentiality agreement templates
- 5 Privacy Disclosure Agreement
- 6 Elements of a confidentiality agreement
- 7 NDA Templates
- 8 How to write a confidentiality agreement?
- 9 Exclusions of a confidentiality agreement
- 10 How long does a confidentiality agreement last?
Confidentiality Agreement Templates
What is a confidentiality agreement?
A confidentiality agreement is a formal contract meant to protect sensitive information of a company, trade secrets, proprietary systems, and products. Here are some circumstances when you may require an another to sign a confidentiality agreement form:
- When you interview or hire an independent contractor or employee who will have access to sensitive or confidential material.
- When you sell your business to a prospective buyer and prevent them from divulging your confidential information to other parties.
- When you show your business’ financial information or business plans to potential investors.
- When employees and other people work on an invention or a patent.
- When receiving services from an individual or company might gain access to sensitive information when providing said services.
To cover all bases, it’s recommended to hire a lawyer to create the language for your confidentiality agreement sample. This is a bit more complicated and it differs for every situation. It’s important to get the wordings right if you would like to protect your interests or your business. Remember that every business is unique so you should make sure that your business is completely protected.
Confidentiality Agreement Forms
Types of confidentiality agreement templates
There are two main formats for confidentiality agreement templates – a one-sided agreement and a mutual agreement. The first one is when you think that only one party will share confidential information with the other party whereas the second one is for situations where each of the parties may share sensitive or confidential information.
While there are advantages in using a mutual confidentiality agreement form, some people avoid using the mutual form if there is no intent to receive confidential information from the other party. One way to settle this is to notify the other side that you don’t want to receive any confidential information. This way, there is no need for a mutual form.
Privacy Disclosure Agreement
Elements of a confidentiality agreement
You don’t have to make a basic confidentiality agreement complicated or lengthy. As a matter of fact, the best ones are no more than a couple of pages long. They just need to have the essential elements of a confidentiality contract:
- The parties involved
This is a straightforward description written at the very start of your contract. If the agreement is of the one-sided type where only one party provides sensitive or confidential information, then you can refer to this as the Disclosing Party while the recipient of the information is the Recipient.
One problematic issue here is to consider whether you should make any other companies or person part of the agreement. If this is the case, then it’s advisable to ask those other parties to sign a basic confidentiality agreement too or you should include them as parties to the original agreement.
- What you deem confidential
In this part of the agreement, provide the definition of what you consider confidential information. On one hand, you as the disclosing party should make the definition to be as broad as possible. This is to ensure that the other side doesn’t find any loopholes where they can start using your confidential information.
For the recipient, they have a strong desire to ensure that the information they’re supposed to keep to themselves is clearly established. The recipient would also want to know the limits of what they can or can’t do.
In particular, oral information can be a difficult thing to handle. Many recipients of a confidential agreement believe that only information in writing can remain confidential. In reciprocation, the party who gives the oral information might say that this isn’t broad enough.
For this situation, the most common compromise is to deem the oral information confidential, but you have to confirm this with the recipient in writing shortly after the disclosure. This way, the recipient has now received notification as to the oral statements you consider confidential.
- Scope of the confidential obligation
The main gist of a confidential agreement template is the 2-part responsibility of the recipient of the confidential information. The recipient has to keep the information confidential and he can’t use the confidential information for himself. In other words, the recipient has to take appropriate steps in preventing others from accessing this confidential information.
If the scope of the confidentiality agreement form is sufficiently broad, you may sue the recipient for damages or stop them should they breach their non-use and confidentiality obligations.
How to write a confidentiality agreement?
Confidentiality agreements are highly restrictive covenants for the simple reason that they limit or restrict an individual’s freedom. Following are the steps to take when making your own confidentiality agreement sample:
- Set the date
It’s important to specify the date when the confidentiality agreement takes effect.
- Identify the parties involved
The two parties involved are the Disclosing Party and the Recipient. Include their complete names so that there will be no confusion about who signed the agreement.
- State the reason or purpose of the agreement
This is best illustrated using an example. For instance, you hire the recipient for a position where they have access to the information you deem confidential. Identify the company property that you want to include in the contract – this refers to the confidential information described in detail.
There is a need to describe this confidential information in detail, because if it’s not in the description, then it will not get protected. You should also describe the things you would like to exclude from the contract. This is the most important aspect of the contract as it defines what you want to protect.
- Details about your business
Depending on the situation, the following are some parts of a business you may want to include:
Information about your customers.
Information about the intellectual property like copyrights, patents, trademarks or service marks.
Information about your business’ marketing and sales.
Information about your products, including the ones still in the process of development.
Information about computer applications, codes, websites, and other technology.
Information about accounting and taxes.
- Describe what the recipient agrees to
The confidentiality contract may include:
Exercising appropriate precautions against the disclosure of confidential information
Not disclosing sensitive or confidential information without getting written consent from you.
Using the confidential information only for business and only on a “need to know” basis
Not disclosing the confidential information to people who haven’t signed the agreement.
• Describe what happens if the recipient breaches the contract
What should you do if the recipient reveals confidential information? The most common solution for this is an injunction. This is an order by the court to stop the other party from sharing any more confidential information.
In some federal cases, the court may grant you the right to seize the property to use in “extraordinary circumstances.” You can also order the recipient to return the confidential information.
- State the date of the agreement’s expiry or termination
You should also specify what notice you will give to the recipient about the termination. There are two options you can set for when your agreement ends:
The recipient agrees to not use the confidential information for an agreed-upon time period even after the agreement ends.
The recipient agrees to not use the confidential information throughout the time of the agreement or any time thereafter.
Exclusions of a confidentiality agreement
It’s normal for every basic confidentiality agreement to have specific exclusions from the recipient’s obligations. The purpose of these exclusions is to deal with situations where it would be too burdensome or unfair for the recipient to maintain the confidentiality of information. The most common of these exclusions include information that:
- The recipient already knows.
- The public already knows even though the recipient didn’t release the information.
- The recipient developed independently developed without use or reference to the confidential information you disclosed.
- Some other party shared with the recipient who isn’t part of the confidentiality agreement.
The agreement could also deal with a situation where the recipient of the confidential information gets compelled to disclose the information by undergoing a legal procedure. The recipient has the right to divulge confidential information if ordered by the court without breaching the agreement and as long as the recipient warned you before the legal proceeding.
How long does a confidentiality agreement last?
As an employer, you have the right to protect yourself and your interests when you require your employees to sign confidential agreements. Having them comply with the requirement can protect your customer data, proprietary information, intellectual property, company strategy, and other vital information.
The period of validity of a confidential agreement is up to you or to any other person who will write the agreement although the standard time period ranges between 2 to 5 years. In addition, there usually is a statement that the confidentiality agreement is automatically terminated once the information that it protects gets disclosed to the public.